User talk:Its anju

April 2024
Hello, Its anju. This is your user talk page; the purpose of this page is notification and communication with other Wikipedia editors. It is not a workspace for articles in progress or for self-promotion. Please use your user sandbox or the draft article space to practice editing or to create new articles. Thank you. — rsjaffe 🗣️ 13:56, 25 April 2024 (UTC)


 * I have again removed inappropriate content from this page; please do not post this type of content here again. As already stated, this page is for communication with other users. --Drm310 🍁 (talk) 14:40, 26 April 2024 (UTC)

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Hire purchase agreement
Meaning:- The term hire purchase refers to an arrangement for buying expensive goods. In a hire purchase agreement, the buyer makes an initial down payment and pays the remaining balance plus interest in installments.

Parties who makes an agreement The parties to a hire purchase agreement are the hire purchaser (the buyer) and the hire vendor ( the seller). There can also be a financier involved in the agreement.

Features of hire purchase agreement

Hire purchase is an agreement where the buyer makes a down payment and pays the remaining balance plus interest in installments.

These types of agreements are generally used for very expensive goods.

Hire purchase agreements are not seen as an extension of credit.

Ownership is not transferred to the purchaser in a hire purchase agreement until all payments are made.

Hire purchase agreements usually prove to be more expensive in the long run than purchasing an item outright.

Advantages of hire purchase agreement Like leasing, hire purchase agreements allow companies with inefficient working capital to deploy assets.It can also be more tax efficient than standard loans because the payments are booked as expenses though any savings will be offset by any tax benefits from depreciation. Business that require expensive machinery, such as construction, manufacturing, plant hire, printing, road freight, transport and engineering may use hire purchase agreements ,as could startups that have little collateral to establish lines of credit. A hire purchase agreement can flatter a company's return on capital employed (ROCE) and return on assets (ROA).This is because the company doesn't need to use as much debt to pay for asset.

Disadvantages:-

Hire purchase agreements usually prove to be more expensive in the long run than making a full payment on an asset purchase. That's because they can have much higher interest costs. For businesses, they can also mean more administrative complexity. In addition, hire purchase and installment systems may tempt individuals and companies to buy goods that are beyond their means. They may also end up paying a very high interest rate, which does not have to be explicitly stated. Rent to own arrangements are also exempt from the truth in Lending act because they are seen as rental arrangements instead of an extension of credit. Hire purchase buyers can return the goods, rendering the original agreement void as long as they have made the required minimum payments.However, purchasers suffer a huge loss on returned or repossessed goods , because they lose the amount they have paid towards the purchase up to that point.

Pros:-

Allows for the purchase of high value items.

Prevents a large outlay of cash

Improves a company's ROA and ROCE

Cons:-

Higher overall costs

Ownership does not transfer till all payments are made

Potential for loss of capital if the good is returned before the contract is up

Increased administrative complexity

Its anju (talk) 08:42, 26 April 2024 (UTC) Its anju (talk) 08:27, 27 April 2024 (UTC)